that in large measure account for the economic dynamics under way i parts of agriculture in the low income countries. Farmers in these c< are responding to the improved pattern of farm prices. They are begii purchase large quantities of new types of agricultural inputs becai profitable for them to use these inputs. They are investing in durable i capital because the expected rate of return is high. I shall not exan role of large irrigation projects (38, 39) although they are one of th factors in the high rate of increase in agricultural production in a fe1 tries; for example, Mexico (18). Investments in tubewells (as in Pakis India) are highly profitable, accelerating the rate at which they ai installed. The two strong dynamic developments that I shall cons agricultural research and chemical fertilizers. I shall also present a she view of developments in the low income regions. Agricultural Research. The high payoff on agricultural research contributions it is making to the production of food grains, and to extent to that of feed grains, is no longer in doubt. The successful work on wheat in Mexico by the Rockefeller Foundation in cooperati the Mexican government is widely known; and similarly, the rice wor Philippines, which has become a joint research enterprise of the Roc and Ford Foundations. India is also benefiting from research there pe to corn, millets, and other crops-first sponsored by the Rockefeller 1 tion. These three country-based research enterprises by no means exh list (1,31,40-47). The social rate of return to investment in scientific and technical edge that enters into agricultural production activities is high relative from most other investment opportunities.* There are as yet no ind of diminishing returns to this class of investment during that pan future that is relevant for economic decisions. The social rate of n investment in research pertaining to Asian agriculture is in all probabil higher than it is in the technically advanced countries. It is one adva entering late upon the process of modernizing agriculture (1, 29, 40, 4 In view of the importance of agriculture in India, it is interesting sider why the agricultural scientists in India delayed so long in takin; tage of the new biological materials. Organized agricultural research tablished in India before independence. But until very recently few r< were devoted to the development of high-yielding varieties of rice anc *A number of careful studies have been completed estimating the social return to investment in agricultural research. I have summarized the results studies in "The Allocation of Resources to Research" (48). The most comp analysis is that by Evenson (49); it shows a social rate of return for U.S. agric about 50 percent per year. The results of the Ardito-Barietta study (50) on w corn research in Mexico indicate an even higher social rate of return. The pion in this area is (41).